On the Internet tax and whether Arizona should or should not repeal its law taxing online sales - Essay Example

Repealing Online Sales Tax In the current business environment, any firm undertaking its operations on the Internet should not be taxed for online sales in states where it lacks physical presence. Nonetheless, the issue of taxing online sales has been subject to debates, particularly because sales over the Internet are evolving at a rapid pace. Furthermore, certain states have put in place laws to govern Internet sales tax, while others are expanding their scope to determine whether sales tax should be collected for engaging in online transactions.

Any online firm must pay sales tax in those states where goods have been shipped to the company’s offices or warehouses in a different state. However, a firm should not pay sales tax in those regions where it lacks physical presence. Hence, it is the duty of consumers to pay taxes for using a personal property, which a business failed to assess in terms of sales tax (Fischer). At the present, the law of Arizona requires that a retailer collect about 5.6 percent sales tax as well as any local taxes for products it sells to residents.

This law is also applicable to online firms that have established their presence in Arizona, such as Target as opposed to the case of Amazon, eBay, and Land’s End, which lack physical presence. Nevertheless, the law stipulates that in case a resident of Arizona purchases a product on the Internet in an area that does not collect tax, then it is the role of the person purchasing the product to make the report as well as dispatch the funds to the state. However, it has not been easy enforcing this law, particularly in the case of individual transactions.

The result is that in the opinion of bricks-and-mortar merchants who must collect sales taxes, their business is losing while the state is lagging behind in terms of collecting the funds needed to drive the society forward. Additionally, the state government in Arizona is losing too much revenue by failing to tax online transactions, while taxation for brick-and-mortar stores is unfair since online dealers do not pay anything. In this case, it is vital to ensure that online merchants collect funds owed as well as make payments to the state in case goods are being shipped.

Here, even though nobody understands the amount of money the state is losing through online transactions, it is true that the growing number of online transactions is leading to a loss amounting to millions of dollars in the region (Fischer). Based on the laws governing online transactions in different states, Arizona should not tax transactions taking place outside the state, as it is the case with Amazon and other similar firms because it would be violating online taxation laws. On the other hand, if an order is placed inside from a computer situated in Tuscon, a relationship exists, meaning that the transaction should be subjected to state taxation (Fischer).

Thus, in the case of Arizona, it is vital to retain tax on Internet sales with companies that have a connection with state and refrain from taxing transactions taking place beyond the state’s borders. Work Cited Fischer, Howard. If Oonline Sales Taxes are Collected, Income Taxes Should be Cut, Arizona House Says. Arizona Daily Star, 3 March 2014. web. 19 May 2015. .